xcentric v. borodkin et al. order granting summary judgment to defendants raymond mobrez and iliana...

7/28/2019 Xcentric v. Borodkin et al. Order Granting Summary Judgment to Defendants Raymond Mobrez and Iliana Llaneras

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Xcentric Ventures, L.L.C., an Arizonalimited liability company,

Plaintiff,

vs.

Lisa Jean Borodkin, et al.,

Raymond Mobrez,

Counterclaimant,

vs.

Xcentric Ventures, L.L.C.; and EdwardMagedson,

Counterdefendants.

No. CV-11-01426-PHX-GMSORDER

Pending before the Court are two Motions. Defendants Raymond Mobrez and

Iliana Llaneras (the AEI Plaintiffs) have filed a Motion for Summary Judgment. (Doc

184.) That Motion is granted. Plaintiff Xcentric Ventures, LLC had filed a Motion for

Reconsideration of several of the Courts discovery and scheduling orders. (Doc. 217.) In

light of the grant of summary judgment for the AEI Plaintiffs, that Motion is now moot.

FACTUAL BACKGROUND

Plaintiff Xcentric Ventures, LLC is an Arizona company that operates the website

www.ripoffreport.com (Ripoff Report). As its name suggests, Ripoff Report is an

online forum where users can read and post messages about businesses that purportedly

Case 2:11-cv-01426-GMS Document 223 Filed 06/17/13 Page 1 of 17


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have ripped off consumers in some manner. (Doc. 199-2 2.) Xcentric claims never to

have removed a post, which allows its users to post anything about anyone. Edward

Magedson is the manager of Xcentric and the editor of Ripoff Report. (Doc. 199-2 2.)

Defendants Raymond Mobrez and Iliana Llaneras were the principals of Defendant Asia

Economic Institute, LLC (AEI), a now-defunct California company that published

current news and events online from the year 2000 until June 2009. (Doc. 187 3.) In

2009, several Ripoff Reports appeared that made various accusations against the AEI

Plaintiffs.

I. THE 2010 LAWSUIT

On January 27, 2010, the AEI Plaintiffs brought an action against Xcentric in

California (the California Action). (Doc. 55, Ex. A.) The California Complaint alleged

RICO racketeering claims against Xcentric predicated on attempted extortion.1 (Id.

6264.) The AEI Plaintiffs allegedly contacted Xcentric after the Ripoff Reports

appeared on the website and learned that Xcentric would not remove the defamatory

posts even if they were false. (Id. 30.) Xcentric informed the AEI Plaintiffs that they

could file a free rebuttal or, if they remained unsatisfied, join the Corporate Advocacy

Program (CAP). (Id. 16, 20, 30.)According to Xcentric, an individual or entity that enters the CAP has to pay a fee

and commit to work with Ripoff Report and the unhappy customers who have filed

reports in order to resolve their complaints. This must include offering full refunds if

requested by the customer. (Doc. 199-2, Ex. B (Magedson Decl. 3) 10; Doc. 199-2

(Magedson Decl. 1) 18.) In return, Ripoff Report acts as a liaison between the CAP

member and its customers by contacting each author who has submitted a report to our

site about the company, and appends various tags and notes to the already-published

Ripoff Reports to show that the subject of the Reports has begun to mend its ways. (Id.

1 Other claims were present in the California Action, but the Court has alreadydismissed this malicious prosecution action as to the AEI Plaintiffs pursuit of thoseclaims. (Doc. 213.) The litigation of the extortion claim is the only basis for maliciousprosecution that remains.



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Ex. B (Magedson Decl. 3) 1012.)

According to the California Complaint, after Xcentric informed the AEI Plaintiffs

that CAP membership required an admission of guilt, Xcentric, through an exchange of

phone calls and emails with Magedson, further informed Mobrez that it would not do

anything about the posts until it was paid a fee of approximately five thousand dollars

($5,000), plus additional monthly monitoring fees. (Doc. 55, Ex. A 33, 62.) To the

AEI Plaintiffs, [t]he implication was clear that for a fee, Defendants would correct the

content of the posts. (Id. 34.) They arrived at this conclusion because Magedson told

them in an email that [t]his program changes the negative listings on search engines into

a positive along with all the Reports on Rip-off Report. (Id. 31.) The AEI Plaintiffs

asserted that Xcentrics program amounts to attempted extortion . . . . Additionally, the

electronic and telephonic communication between Mobrez and Magedson constitute[d]

several predicate acts sufficient to establish a pattern of racketeering activity as that

term is defined in [the applicable statute]. (Id. 6364.)

The California District Court bifurcated the case to consider the extortion claim2

first and ordered the AEI Plaintiffs to produce a declaration describing meetings with

any representative of defendant regarding extortion[ ]. (Id., Ex. B.) On May 3, 2010Mobrez filed an affidavit with the California District Court. (Id., Ex. C.) He stated that he

communicated with Magedson several times by telephone and email during April and

May of 2009. (Id. 614.) During those conversations, Mobrez objected to the Reports

and asked Magedson to remove them, but Magedson refused, claiming Xcentric never

removes a post. (Id.) Instead, he directed Mobrez to join the CAP. (Id. 610.) He also

warned Mobrez that the lawsuits were futile. (Id. 10.) In a subsequent phone call

Mobrez asked Magedson how much enrollment in the CAP would cost, and Magedson

informed him that it would cost . . . at least five grand plus a monthly maintenance fee

of a couple hundred dollars. He stated that these charges were based on the size [o]f the

2The references to extortion claims throughout this Order are references to the

RICO claim predicated on attempted extortion.



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company. Specifically, he stated that the more money a company made, the more they

would be charged. (Id. 1113.) Magedson refused to do anything until Mobrez agreed

to enroll in the CAP. When asked what we would receive if we paid the fees he

demanded, Mr. Magedson claimed that all the negative goes away and you see the

positive. (Id. 14.) Mobrez attached to his declaration true and accurate copies of

hand written notes taken by me during my telephone conversations with Mr. Magedson.

(Id. 19.)

Llaneras listened in on the conversations between Mobrez and Magedson and

affirmed in her declaration that the conversations occurred as Mobrez described. (Id., Ex

D.) She attached to her declaration handwritten notes I took during the conversations as

they occurred. (Id. 6; id. Ex. A.) She confirmed that during the conversation of May

5, 2009, Mr. Magedson requested $5,000 plus an additional monthly fee to enroll in

what Mr. Magedson referred to as the CAP. On May 12, 2009, Mr. Magedson described

this CAP as the negative goes awaysee positive! (Id. 8.)

At his deposition, Mobrez reaffirmed the statements about his conversations with

Magedson. (Doc. 55 3942; Id., Ex. E at 1.) Xcentrics counsel then disclosed to

Mobrez and Llaneras that all phone conversations between Magedson and Mobrez hadbeen recorded and that the recording flatly contradicted the statements made in their

affidavits that Magedson quoted a price for the CAP. (Id.) In fact, Magedson made

almost none of the comments attributed to him in the AEI Plaintiffs Declarations. (Doc.

199-2 (Magedson Decl. 1) 5.) The phone conversations were brief and Magedson made

only generic references to the websites information on CAP. (Id. 619) Magedson

also sent a form email describing the basic contours of the program. (Id. 59.) The cost

of enrolling in the CAP did not appear on the website because, according to Magedson

there is no set costit fluctuates based on the individual situation. (Id. 18.)

On May 20, 2010, Mobrez and Llaneras filed corrected affidavits. (Doc. 55,

Exs. F, G.) These new affidavits did not describe any telephone conversations where

Magedson threatened AEI or asked for money. (Id., Ex. F.) Mobrez substantially recanted



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all of the relevant details of the previous declaration, save two: he maintained that

someone at Xcentric told him it would cost five grand to join the CAP, and added that

he received several calls from Xcentric. (Id. 25.) Xcentric disputes these points

Mobrez blamed a mix-up between telephone and email conversations for the inaccurate

statements in his prior declaration. (Id. 6.) Mobrez also admitted that the exhibit

attached to his prior declaration was not a copy of the notes he took contemporaneously

but notes of my confused efforts to reconstruct the exact details of the calls, based on a

combination of imperfect memory, documents I located at the time, and erroneous

assumptions drawn from Mr. Magedsons prior declarations. (Id. 6.) Llaneras followed

suit and admitted that the substance of the telephone conversations was not what had

been previously stated and likewise claimed she mixed up emails. (Id., Ex. G.) She

likewise admitted her handwritten notes [she] took during the conversations as they

occurred were actually written much later. (Id.)

Xcentric subsequently moved for summary judgment on the RICO extortion

claims. That motion was granted on July 19, 2010. At that point, the AEI Plaintiffs were

not relying on the substance of the phone calls to support their claims that Defendants

engaged in attempted extortion. Instead, Plaintiffs appear to rely solely on the emailsMagedson sent to Mobrez and the content on Defendants website. Asia Econ. Inst. v

Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054 at *14 n.14 (C.D

Cal. July 19, 2010). After extensively reviewing the evidence submitted by both parties,3

[T]he only evidence that the Court can consider regarding thecommunications between Plaintiffs and Defendants that are relevant toPlaintiffs' extortion claim are: (1) the emails between the parties; (2) thelimited information contained in the Mobrez and Llaneras corrected

declarations filed on May 20, 2010-that is, information about the emailsand about the call regarding five grand; and (3) Magedson's testimonyregarding the substance of his calls with Mobrez, which is not refuted byPlaintiffs' corrected declarations. For the reasons stated below, the Courtfinds that this evidence, even construing all reasonable inferences insupport of Plaintiffs, fails to demonstrate a triable issue on Plaintiffs' RICOclaims.

Asia Econ. Inst. v. Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054at *14 (C.D. Cal. July 19, 2010).



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Judge Wilson found that no triable issue of fact exists as to whether Defendants engaged

in attempted extortion. The communications between Plaintiffs and Defendants do not, as

a matter of law, suggest or imply any threat within the meaning of California Penal Code

519 [Californias extortion statute]. Id. at *20. Summary judgment was granted for

Xcentric on the RICO extortion claim.

II. THE CURRENT ACTION

On July 18, 2011, Xcentric filed a Complaint in this Court, bringing claims for

malicious prosecution and aiding and abetting tortious conduct against AEI, Mobrez

Llaneras, and their attorneys. (Doc. 1.)4

The AEI Plaintiffs moved for judgment on the

pleadings on November 30, 2012. (Doc. 156.) The Court granted that motion in part

dismissing all of Xcentrics claims save those premised on the extortion litigation. (Doc

213.) The AEI Plaintiffs now move for summary judgment.

DISCUSSION

I. LEGAL STANDARD

Summary judgment is appropriate if the evidence, viewed in the light most

favorable to the nonmoving party, demonstrates that there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ.P. 56(a). Substantive law determines which facts are material and [o]nly disputes over

facts that might affect the outcome of the suit under the governing law will properly

preclude the entry of summary judgment.Anderson v. Liberty Lobby, Inc., 477 U.S. 242

248 (1986). In addition, the dispute must be genuine, that is, the evidence must be such

that a reasonable jury could return a verdict for the nonmoving party. Id.; Villiarimo v

Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002). Thus, the nonmoving party

must show that the genuine factual issues can be resolved only by a finder of fact

because they may reasonably be resolved in favor of either party. Cal. Architectura

4Default judgment has been entered against one attorney and AEI. (Doc. 126.)

The Court dismissed Xcentrics case against the other attorney under Rule 12(b)(6).(Doc. 146.)



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Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987)

(quotingAnderson, 477 U.S. at 250).

Because [c]redibility determinations, the weighing of the evidence, and the

drawing of legitimate inferences from the facts are jury functions, not those of a judge, . .

. [t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be

drawn in his favor at the summary judgment stage. Id. at 255 (citing Adickes v. S.H

Kress & Co., 398 U.S. 144, 15859 (1970)); Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th

Cir. 1999) (Issues of credibility, including questions of intent, should be left to the

jury.) (citations omitted).

Furthermore, the party opposing summary judgment may not rest upon the mere

allegations or denials of [the partys] pleadings, but . . . must set forth specific facts

showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); see Matsushita Elec

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 58687 (1986); Brinson v. Linda Rose

Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995); Taylor v. List, 880 F.2d 1040, 1045

(9th Cir. 1989); see also L.R.Civ. 1.10(l)(1) (Any party opposing a motion for summary

judgment must . . . set[ ] forth the specific facts, which the opposing party asserts

including those facts which establish a genuine issue of material fact precluding summaryjudgment in favor of the moving party.). If the nonmoving partys opposition fails to

specifically cite to materials either in the courts record or not in the record, the court is

not required to either search the entire record for evidence establishing a genuine issue of

material fact or obtain the missing materials. See Carmen v. S.F. Unified Sch. Dist., 237

F.3d 1026, 102829 (9th Cir. 2001); Forsberg v. Pac. N.W. Bell Tel. Co., 840 F.2d 1409

141718 (9th Cir. 1988).

II. ANALYSIS

A. Malicious Prosecution

Under California law, [m]alicious prosecution is a disfavored action. . . . This is

due to the principles that favor open access to the courts for the redress of grievances.

Downey Venture v. LMI Ins. Co., 78 Cal. Rptr. 2d 142, 150 (Ct. App. 1998). California



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law requires the narrow construction of a malicious prosecution claim to ensure that

litigants with potentially valid claims will not be deterred from bringing their claims to

court by the prospect of a subsequent malicious prosecution claim. Sheldon Appel Co. v.

Albert & Oliker, 765 P.2d 498, 502 (Cal. 1989).

Three elements must be established to show malicious prosecution: a plaintiff

must demonstrate that the prior action (1) was commenced by or at the direction of the

defendant and was pursued to a legal termination in his, plaintiffs, favor; (2) was brought

without probable cause; and (3) was initiated with malice.Id. at 501 (internal quotations

omitted). The AEI Plaintiffs assert that Xcentric has failed to produce sufficient evidence

to justify trial on any of those elements.5 Because the Court finds that the extortion claim

did not lack probable cause on the basis of the undisputed facts, summary judgment is

appropriate and the remaining claim is dismissed.

A litigant will lack probable cause for his action either [1] if he relies upon facts

which he has no reasonable cause to believe to be true, or [2] if he seeks recovery upon a

legal theory which is untenable under the facts known to him. Sangster v. Paetkau, 80

Cal. Rptr. 2d 66, 75 (Cal. Ct. App. 1998). Xcentrics chief claim throughout this lawsuit

the claim that survived the AEI Plaintiffs Motion for Judgment on the Pleadings, is thatthe AEI Plaintiffs lied about their conversations with Magedson to fabricate evidence for

a baseless extortion claim. The Court has previously ruled that the legal theory behind the

AEI Plaintiffs claim, assuming the truth of the facts they alleged, was not so absurd that

no reasonable attorney would have advanced it. (Doc. 146 at 1113.) That foreclosed

any argument that the AEI Plaintiffs extortion theory lacked probable cause

Nevertheless, the Court found that Xcentric sufficiently pled a lack of probable cause

because its allegations of falsification could show the AEI Plaintiffs relie[d] upon facts

5The AEI Plaintiffs devote most of their Motion and Statement of Facts to an

attempt to relitigate their claims in the California Action. This includes claims aboutXcentrics supposed immunity under the Communications Decency Act or provision of aseparate arbitration program. None of those matters are relevant to the narrow issueremaining in this suit.



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which [they] ha[d] no reasonable cause to believe to be true. (Doc. 213.) Xcentric thus

argues that the AEI Plaintiffs alleged lies formed the backbone of their extortion claim

The AEI Plaintiffs now claim that there is insufficient evidence to show that the extortion

claimed lacked probable cause because their extortion claim did not rise or fall with their

supposedly false claims regarding Magedsons communications. In making this

argument, they also relied on separate email communications and the structure of the

CAP itself.

The burden to show a lack of probable cause is high because California law gives

a malicious prosecution defendant the benefit of the doubt: [i]n making its determination

whether the prior action was legally tenable, the trial court must construe the allegations

of the underlying complaint liberally in a light most favorable to the malicious

prosecution defendant. Sangster, 80 Cal. Rptr. 2d at 75. All the defendant needs is some

rational basis for the claim pursued. Accordingly, the defendants lack of success in the

underlying action is hardly an automatic basis for a malicious prosecution suit. Paiva, 85

Cal. Rptr. 3d at 849. Indeed, [p]robable cause may be present even where a suit [proves]

merit[less]. Jarrow Formulas, Inc. v. LaMarche, 74 P.3d 737, 743 n.13 (Cal. 2003)

(internal quotations omitted).The probable cause standard is objective and considers the facts upon which the

defendant acted in prosecuting the prior case. Paiva v. Nichols, 85 Cal. Rptr. 3d 838

848 (Cal. Ct. App. 2008) (citing Sheldon Appel, 765 P.2d at 51112).Whether probable

cause existed on those facts is a question of law for the court to decide, often at the

summary judgment stage. Id.; Sheldon Appel, 765 P.2d at 50307. Nevertheless, if the

facts upon which the defendant acted in bringing the prior action are controverted, they

must be passed upon by the jury before the court can determine the issue of probable

cause. Sheldon Appel, 765 P.2d at 506. That means [w]hat facts and circumstances

amount to probable cause is a pure question of law. Whether they exist or not in any

particular case is a pure question of fact. The former is exclusively for the court, the latter

for the jury.Id. As with all issues on summary judgment, though, [o]nly disputes over



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facts that might affect the outcome of the suit under the governing law will properly

preclude the entry of summary judgment.Anderson, 477 U.S. at 248. So long as the core

facts are undisputed, the Court may proceed to determine whether probable cause was

present on the basis of those facts. Sangster, 80 Cal. Rptr. 2d at 76.

According to the California Complaint, the CAP was extortionate. (Doc. 55, Ex. A

62.) It promised, for a fee and with an admission of wrongdoing, to change[ ] the

negative listings on search engines into a positive along with all the Reports on Rip-off

Report. (Id.) The AEI Plaintiffs thought this claim implied that Defendants would

correct the content of the defamatory posts, (id. 34), although Xcentric maintains that

it does not remove posts. When asked by the California District Court to provide

declarations about conversations where this extortion occurred, Mobrez cited email and

telephone conversations with Magedson where they allegedly discussed the contours of

the CAP and Magedson stated that membership would cost at least five grand plus a

monthly maintenance fee of a couple hundred dollars. (Id., Ex. C 11-13.) Repeating

the claim made in the Complaint, Mobrez asserted that Magedson described the benefits

of the CAP as all the negative goes away and you see the positive. (Id. 14.)

Xcentrics argument that the extortion claim lacked probable cause centers on theAEI Plaintiffs claim in the California Complaint and later declarations about their

conversations with Magedson. There is substantial evidence those statements were false

Magedson vehemently denies the substance of those conversations as contained in the

declarations filed by Mobrez and Llaneras. (Doc. 199-2 (Magedson Decl. 1) 5.) He

claims that audio recordings directly contradict the AEI Plaintiffs claims that Magedson

told them that CAP membership would cost around $5,000, plus a monthly rate. (Id.

619.)6 Even without direct evidence of that contradiction, the wholesale changes in the

corrected declarations evidence that the AEI Plaintiffs were not speaking truthfully in

6Neither party has sought to provide transcripts of those recordings or otherwise

use them for purposes of this Motion. The Court therefore abstains from ruling on theiradmissibility.



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their initial submissions. Both Mobrez and Llaneras admitted that their statements were

not accurate. (Doc. 55, Exs. F, G.) Llaneras had averred that she made contemporaneous

handwritten notes of the conversation that purport to show Magedson demanded $5,000

to join the CAP, but she later admitted that those notes were not created

contemporaneously. (Id., Ex. G; Doc. 181-1, Ex. C.) Finally, the AEI Plaintiffs have

never claimed in this litigation that their statements in the original declarations were true

While they maintain that someone from Xcentric contacted them and told them that

CAP membership would cost five grand, they have submitted no evidence to that

effect.7

Still, the AEI Plaintiffs contest Xcentrics claim that they lied about those

conversations; instead, they claim that they confused the telephone conversations with

email chains and conversations with others. There is thus a factual dispute surrounding

the declarations, their content, and the AEI Plaintiffs state of mind.

But even assuming that the AEI Plaintiffs fabricated or lied about those

conversations to support their extortion claim, California law is clear that Xcentrics case

fails if there are any undisputed facts objectively establishing, as a matter of law, that

any reasonable attorney would have thought the claims . . . were tenable. Sangster, 80

Cal. Rptr. 2d at 76 (emphasis added). The AEI Plaintiffs assert that the Parties disputeabout the declarations does not affect the core of the extortion claim. Indeed, the

documents filed in the California Action show that the extortion claim never relied solely

on the telephone conversations between Mobrez and Magedson. The AEI Plaintiffs

included all electronic and telephonic communication between Mobrez and Magedson

as the several predicate acts sufficient to establish a pattern of racketeering activity . .

. (Doc. 55, Ex. A 64.) Throughout the California Action, the AEI Plaintiffs cited

telephone and email communications as evidence of that pattern. The California District

Courts decision analyzed each of those communications. See AEI, 2010 WL 4977054 at

7 The AEI Plaintiffs did file an unsigned declaration purporting to be from aSteven Monk, who claims he was contacted by Xcentric about paying money to getcontent removed. (Doc. 187, Ex. 11.) Obviously, an unsigned declaration is inadmissibleevidence and the Court has not considered it.



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*1519 (In sum, none of the communications Defendants sent to Plaintiffs contain any

suggestion that the CAP Program (or the payment of fees) would result in negative

reports being taken off the website or that such reports would no longer be featured in

search results.).

While there may be a dispute of fact as to the extent of the AEI Plaintiffs reliance

on the supposedly nonexistent telephone conversations, there is no genuine dispute of

material fact that those conversations were not the sole basis of the case. The AEI

Plaintiffs advanced other conversations to show a pattern of racketeering activity. (Doc.

55, Ex. A 6364.) Xcentrics single-minded focus on the oral conversations ignores

the fact that the AEI Plaintiffs theory swept more broadly.

In fact, the focus of AEI Plaintiffs extortion claim was the CAP program itself

not specific conversations. Their claim was that Defendants program amounts to

attempted extortion. (Doc. 55, Ex. A 63.) The oral and written conversations, with

their references to the website, provided the predicate acts. It is undisputed that the CAP

works in the following way: (1) RipoffReport user posts report that company does not

like; (2) company contacts RipoffReport to do something about it; (3) RipoffReport

directs the company to the CAP; (4) company pays a fee to enroll in the CAP andacknowledges wrongdoing or makes efforts to restore consumer confidence; (5) and, in

return, Ripoff Report will note on the posts that the company is now enrolled in the CAP

and is addressing the problems, among other things. Xcentric does not dispute this

Indeed, Magedson has submitted several declarations that describe how the CAP

functions. And it is precisely those facts that formed the basis of the extortion claim. That

the AEI Plaintiffs may have made false statements about the amount of the fee or where

or when they learned about the fee does not alter the fact that there is a fee.

In addition, Xcentric advertises that CAP participation results in better publicity

for the companyMagedson has admitted that I frequently explain to people that one of

the benefits of joining the CAP program is that they can turn a negative into a positive

(Doc. 199-2, Ex. B 14.) Those are the same words quoted by the AEI Plaintiffs in their



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Complaint and Declarations. While Magedson may not mean that RipoffReport.com will

go in and modify the content of the actual post, it is undisputed that Ripoff Report does

update the post with information about the companys participation in the CAP and

remedial efforts.

The core facts of the AEI Plaintiffs extortion claim are therefore undisputed

because they are the basic aspects of the CAP, and the predicate acts are Magedsons

description of the CAP in email and telephone conversations. Xcentric allows users to

post content, and then charges for participation in a program that turns a negative into a

positive. And this Court has already determined that an extortion theory that relied on

these facts, while tenuous and ultimately meritless, did not lack probable cause. For

purposes of clarity, the Court repeats that ruling here:

Xcentrics FAC alleges that [the AEI Plaintiffs] proceeded on an RICOextortion theory because such a theory would enable the AEI Plaintiffs toavoid the limitations imposed by the Communications Decency Act(CDA), 47 U.S.C. 230(c)(1). (Doc. 55 1419.) The initial CaliforniaComplaint supports this claim: the AEI Plaintiffs alleged that conversationsbetween Xcentric and Mobrez demonstrated that Xcentric engaged inextortion. (Doc. 1, Ex. A 5768.) See AEI I, 2010 WL 4977054 at *14.

Extortion requires that Xcentric threatened to do an unlawful injury [to theAEI Plaintiffs]; to accuse [the AEI Plaintiffs] of any crime; to expose, or toimpute [to the AEI Plaintiffs] any deformity, disgrace or crime; or ... toexpose any secret [of the AEI Plaintiffs]. Cal. Penal Code 519. The firstCalifornia Complaint alleged that the CAP, in exchange for a fee, promisedto change[ ] the negative listings on search engines into a positive alongwith all the Reports on Rip-off Report. (Doc. 1, Ex. A 62.) The AEIPlaintiffs . . . thus argued that the presentation of the CAP program, alongwith its fees, amounted to a form of extortion. Moreover, although Mobrezhad corrected his declaration, he maintained that someone from Xcentric

had told him it would cost five grand to join the CAP. (Doc. 1, Ex. F 5.)

InHy Cite Corp. v. badbusinessbureau.com, a decision of this Court denieda motion to dismiss an extortion claim that had a similar foundation. 418 F.Supp. 2d 1142, 114950 (D. Ariz. 2005) (Here, Defendants operate awebsite. Plaintiff alleges that Defendants create and solicit false anddefamatory complaints against businesses, but will cease this conduct for a



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$50,000 fee and $1,500 monthly retainer. Remedying the publication offalse and defamatory complaints, which Defendants allegedly created andsolicited, does not give Defendants the right to collect fees.). Nevertheless,the California District Court eventually rejected all of [the AEI Plaintiffs]

theories for lack of evidence. See AEI I, 2010 WL 4977054 at *1619([N]one of the communications Defendants sent to Plaintiffs contain anysuggestion that the CAP Program (or the payment of fees) would result innegative reports being taken off the website or that such reports would nolonger be featured in search results. The offer to help Plaintiffs restore theirreputation and facilitate resolution with the complainants in exchange for afee does not constitute a threat under California Penal Code 519.).

Based on the allegations in Xcentrics FAC and the documents of which theCourt has taken judicial notice, the Court cannot say that [the AEI

Plaintiffs] legal theory was so absurd that no reasonable attorney wouldhave advanced it. The Hy Cite court found the theory at least tenable on amotion to dismiss, although the California District Court ultimately foundthe evidence lacking in th[is] case . . . . Moreover, even an absence of legalauthorityor presence of contrary decisionsdoes not amount to a lack ofprobable cause. See Franklin Mint Co. v. Manatt, Phelps & Phillips, LLP,184 Cal.App.4th 313, 109 Cal.Rptr.3d 143, 182 (2010) ([A] claim is notuntenable merely because there is no existing authority that indisputablyestablishes its legal viability. Indeed, a claim is not necessarily untenableeven if the existing authority is directly adverse, provided there is a tenablebasis to argue for an extension, modification, or reversal of existing law.)(emphasis in original). As the California Supreme Court has recognized, acourt must properly take into account the evolutionary potential of legalprinciples. Sheldon Appel, 254 Cal.Rptr. 336, 765 P.2d at 511 (emphasisin original).

(Doc. 146 at 11-13.) That ruling was appropriate because [t]he question whether, on a

given set of facts, there was probable cause to institute an action requires a sensitive

evaluation of legal principles and precedents, a task generally beyond the ken of lay

jurors, which means the Court decides whether a given set of facts (here, the CAP and

its functions) could support a legal claim (here, extortion). Sheldon Appel, 765 P.2d at

504.

In this regard, Xcentrics case is very similar to Sangster. There, the malicious

prosecution plaintiff alleged that defendants fabricated evidence to support their claims in



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the underlying litigation. 80 Cal. Rptr. 2d at 76. Yet that was not enough to get the

malicious prosecution claim to a jury. The principle difficulty with [plaintiffs]

argument is that it does not address the question before us: that is, whether there are any

undisputedfacts objectively establishing, as a matter of law, that any reasonable attorney

would have thought the claims of [defendants] in the cross-complaint were tenable. Id

(emphasis in original). Crucially, the fact there may be some disputed facts relevant to

the merits of the underlying action does not by itself defeat a motion for summary

judgment in a malicious prosecution action. If undisputed facts in the record do establish

an objectively reasonable basis for bringing the underlying action, the existence of other

allegedly disputed facts is immaterial.Id. (emphasis in original). There, the Court found

that undisputed evidence . . . upon which all . . . causes of action . . . were expressly

based . . . independently established the existence of probable cause to initiate the cross-

complaint.Id.

So too here. There is evidence that the AEI Plaintiffs made false statements to

support their extortion claim. Normally, the murky facts surrounding the declarations

would go to the jury. Yet the extortion claim could survive on the undisputed facts of the

AEI Plaintiffs casenamely, how the CAP functions. The allegedly false statementswere not the skeleton of the extortion claimthey only provided some of the factual

detail. The AEI Plaintiffs relied on other statementsin phone calls or emails directing

the AEI Plaintiffs to the CAP websiteas evidence of predicate acts of extortion. See

AEI, 2010 WL 4977054 at *14. Moreover, the actual amount of the CAP fee (the

principle dispute in the declarations) was not essential to the extortion claimjust the

existence of a fee, which is undisputed. As Sangster instructs, there is no claim for

malicious prosecution where this is undisputed evidence . . . upon which all . . . causes

of action . . . were expressly based . . . [that] independently established the existence of

probable cause to initiate the [underlying claim]. 80 Cal. Rptr. 2d at 76. The AEI

Plaintiffs may have made false statementseven liedabout some of the facts. But their

case did not depend on those statements. Their lawsuit challenged the CAP and how it



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functioned. About that there is no genuine dispute of material fact. Because the Court has

previously concluded that an extortion claim based on the general functionality of the

CAP did not lack probable cause, it determines that the AEI Plaintiffs extortion claim

did not lack probable cause as a factual or legal matter.

Once a court concludes that probable cause was not lacking, the malicious

prosecution action fails, whether or not there is evidence that the prior suit was

maliciously motivated. Sheldon Appel, 765 P.2d at 504.Summary judgment for the AEI

Plaintiffs is therefore appropriate on the malicious prosecution claim.

B. Aiding and Abetting

The AEI Plaintiffs have also moved for summary judgment on the aiding and

abetting claim. Xcentric has never addressed the aiding and abetting claim separate from

the claim for malicious prosecution, and did not address the AEI Plaintiffs argument in

its Response. The same facts appear to support each claim, and Xcentric has never argued

otherwise. There is no evidence cited by the Parties that would support a separate aiding

and abetting claim. Summary judgment on that claim is therefore appropriate as well.

CONCLUSION

The AEI Plaintiffs extortion claim did not lack probable cause. While there aredisputes regarding certain statements the AEI Plaintiffs offered to support their claim,

there are undisputed facts upon which they could maintain a claim for extortion. Xcentric

has not put forth any evidence to support its claim for aiding and abetting. California law

requires judgment for Defendants in such a case.

IT IS THEREFORE ORDERED that Defendants Motion for Summary

Judgment (Doc. 184) is GRANTED. The Clerk of Court is directed to terminate this

action and enter judgment in favor of Defendants Mobrez and Llaneras. Plaintiff shall

take nothing.

/ / /

/ / /

/ / /



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IT IS FURTHER ORDERED that Plaintiffs Motion for Reconsideration (Doc

217) is denied as moot.

Dated this 17th day of June, 2013.


xcentric v. borodkin et al. order granting summary judgment to defendants raymond mobrez and iliana...

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